Monday, July 27, 2009

Ever since it had turned hot, the boy’s lemonade stand had been very busy; so much so they had to hire some of their friends to work the stand. As the demand for the lemonade went up, the boys raised their price to cover the additional cost of hiring workers. The increase in the price of a cup of lemonade had not deterred too many people from buying their cold refreshing lemonade since the heat had made it more popular.

In response, some parents decided to buy pre-paid cards to give to their children as part of their allowances. These parents were able to get a good deal from the lemonade stands since they were buying so many cups in advance. Unfortunately, by having lemonade pre-paid, these children rarely tried to find the best deal among the town’s four lemonade stands.

There were, however, two groups who were especially sensitive to the increase in the price of lemonade: the elderly who were living on a fixed income and the children from the poor part of town.

The elderly thought it would be a good idea if they didn’t have to pay the full cost of a cup of lemonade so they showed up at the next town hall meeting to ask that other lemonade drinkers help to pay for their lemonade purchases. And since the elderly typically vote in large numbers, the town’s mayor and council members were more than eager to help their elderly voters, uh, I mean citizens.

The town council decided it would require all operators of lemonade stands to collect a fee on each cup sold. The lemonade stand operators would send the money collected to the town council who would in turn send a check to the elderly to help cover the cost of their lemonade purchases. Since the elderly tend to drink more lemonade than younger people, the fee wasn’t enough to pay for all the cups of lemonade they consumed. So the town council decided to set a lower price that it would pay for a cup of lemonade sold to the elderly and require lemonade stand operators to serve all elderly persons.

The elderly’s access to lemonade was fixed, but what about the kids from the poor part of town? The town council decided to buy these voters, uh, I mean help the poor by passing a law requiring all persons who shows up at a lemonade stand thirsty be given a cup of lemonade even if they can’t pay.

The only kids who had to pay more for lemonade were the ones who were not given an allowance but had to work for their lemonade money. Some mowed lawns, some baby sat, and some delivered newspapers. They did not have access to pre-paid cards and didn’t live in the poor part of town so they cold not get free lemonade. The lemonade stands simply increased the price to these kids to cover their costs which were not being paid for by the elderly and the poor kids.

When word got out that the town’s lemonade stands had to serve cups of lemonade even if you didn’t have money to pay for it, boys from surrounding towns would ride their bikes to this town just to get free lemonade. Even after a few of the town’s citizens complained about that, the town council passed an ordinance prohibiting the lemonade stand operators from even asking about where a kid lives.

The once thriving lemonade stands in this town were no longer healthy. Needless to say the system was broke. The free enterprise system had failed. Something had to be done.

And Barry had an idea.

To be continued (but not right away as the summer is for family not blogging).

Wednesday, July 22, 2009

Beven Sabo at Free Market Mojo on the two fundamental questions to ask in the nationalized health care debate:

Assuming, for the sake of argument, that Obamacare is better and cheaper than the current system (which it is not), I believe it would still be detrimental to our long-term interests. The threat to liberty posed by Obamacare is grievous. For both practical and philosophical reasons, every American should be horrified by the very thought of President Obama’s proposed health care plan. As Ayn Rand wrote about such programs, two questions must be asked: “By what right?” and “At whose expense?”